Slap the PUC / It May Be the Last Chance to Protect Independent ISPs From Extinction

Hal Plotkin, Special to SF Gate

Published 4:00 am, Tuesday, July 31, 2001

The state Public Utilities Commission is expected to rule shortly on a complaint filed last week by independent Internet service providers. The ruling will help determine whether the state's roughly 200 remaining independent ISPs will be able to survive or whether they and the competitive forces they represent will go under for good, which would further damage what's left of our state's already tattered high-tech economy.

Public pressure on the PUC could be an important factor.

Like other local monopolies, PacBell has successfully stuck its foot in the digital door, which makes it much harder for competing companies to use that door to the fullest extent possible.

Current law requires PacBell to fairly lease its DSL lines to competing high-speed Internet ISPs. But the service providers have been complaining for years about unfair treatment by PacBell and its parent company, SBC Communications.

Similar to the previous disputes, the latest skirmish is all about who gets access to telecommunications customers, under what terms and at what costs.

California's struggling ISPs are asking the PUC for relief that is very simple and easy to implement. First, they want the PUC to force PacBell to allow customers to switch between DSL Internet service providers the same way, and with the same speed, that users of slower dial-up modems can switch ISPs. At present, because of PacBell's lengthy and cumbersome provisioning procedures, when a DSL service provider goes out of business, it can take weeks before consumers hooked up to that service are permitted to obtain a new connection. The ISPs say PacBell often uses that time to poach those customers.

The service providers also want the PUC to stop PacBell from demanding that they sign contracts that require them to market, without compensation, future PacBell services such as video teleconferencing. PacBell's latest contract promises to pull the plug on any ISPs that won't give up that and other parts of their future revenue stream. The ISPs say they should not, as a condition of leasing DSL lines, be forced to help PacBell sell its products. They also say they won't be able to make any money for themselves if they do.

If the independent ISPs prevail, consumers will have more choices about where they obtain high-speed Internet access in the future. It also means the ISPs will be around to help drive demand for the high-tech equipment, software and services they will need to support their customers.

On the other hand, if the independent ISPs fail, there will be less demand for telecommunications equipment and the related products and services that would have been purchased by those firms. What's more, PacBell has proven unable to keep up with DSL demand. It would be difficult to come up with a more effective way to further accelerate the current downward economic spiral than putting the state's remaining independent ISPs out of business.

Unfortunately, now that some of PacBell's largest competitors, such as NorthPoint Communications, Rhythms NetConnections and Covad Communications, are either dead or dying, it looks like PacBell is about to claim victory. But that triumph is coming at a considerable expense to the rest of us.

To date, roughly 300,000 tech jobs have been lost nationwide, during the wait for broadband, at companies ranging from new-media operations such as the sports-oriented Quokka.com to fiber-optics firms such as JDS Uniphase. The combined losses of networking equipment and new-media firms alone now hover in the $100 billion-dollar range.

To be sure, not all of those losses can be attributed to the determined defense of the digital doorway mounted by local phone companies such as PacBell. But the direct and indirect damages are certainly much higher than the comparatively measly $38.5 million in fines that have already been assessed against SBC so far this year for mistreating rivals that use part of its network.

Sadly, at this point we'll never know how much more healthy our local economy might have been today if competing telecommunications firms had been free over the past few years to bring greater numbers of cheap, fat digital pipes into our homes and offices, rather than spend so much of their time and energy petitioning courts and regulators for fair treatment by the local phone monopoly.

The high-tech economy is shriveling right before our eyes as demand continues to erode for goods and services -- many of which are made locally -- designed for a high-speed networked economy that has thus far failed to materialize. That's hardly surprising, though, given the stunningly successful job incumbent local phone monopolies such as PacBell have done sabotaging broadband competitors.

The complaints have been legion, both here and across the nation. According to a recent national survey conducted by the ISP-friendly New Networks Institute, for example, nearly three-quarters of DSL service providers say the local phone monopoly routinely loses or misplaces some of their orders. In addition, more than half of the ISPs say their customers have been switched to the local monopoly's DSL service without permission, a practice known as "slamming."

ISPs also report mysterious problems with the phone lines they lease, which sometimes are not repaired for days, even when those repairs don't require on-site work. Frequently, that's just long enough to make sure competitors lose those customers.

Meanwhile, local Bell companies have also been caught telling consumers they would be better off, and would have fewer disconnection problems, if they bought DSL directly from the telecommunications firms.

Here in the Bay Area, workers at both PacBell and at independent ISPs have told me that individual subscriber lines, including my own, have been disconnected by rivals searching for available circuits. The lines have tags on them that are supposed to prevent unauthorized disconnections. But, these days, at least some of those tags are now being found discarded on the floors of the central routing facilities that PacBell, by law, must share with competitors.

For its part, PacBell says its 500,000-plus California DSL subscribers are evidence of a healthy broadband market. But consumer complaints about PacBell's DSL have been rampant. And even when it does work, the slowpoke DSL technology PacBell has made available doesn't come anywhere close to providing the speeds needed to make true broadband services such as real-time, high-quality video downloads a reality -- not to mention the more data-rich HDTV broadcasts that are in the works.

In a recent survey of 200 top high-tech executives conducted by telecommunications supplier Marconi Corp., for example, more than two-thirds say broadband has failed to meet market expectations. More alarmingly, the investment-banking firm Legg Mason now predicts that if current trends continue, by 2004 just one-fifth of US households will have a choice of broadband providers, while fully half the country will be stuck with just one high-speed Internet access option.

That prospect threatens to even further damage the high-tech economy. But it's not too late to turn this situation around.

Here's what you can do:

E-mail the PUC commissioners at public.advisor@cpuc.ca.gov and tell them you are watching. Be sure to include your name, mailing address and phone number to ensure that your complaint becomes part of the public record. Tell them competition is what creates faster progress, and remind them that their job is to make sure the competition is fair. Tell them you understand that competing companies don't have equal access to the telecommunications infrastructure, which is helping stop the digital revolution in its tracks.

Tell them jobs -- maybe yours -- are at stake, and that California consumers expect the PUC to fully enforce the law to make sure each competing company gets a fair break.

The politically appointed PUC members might not listen. But a massive outpouring of letters from consumers and business leaders will provide useful evidence if and when the time finally arrives to petition the courts to take over the duties of the PUC as a consequence of its increasingly clear pattern of failing to protect the public as required by law.

Hal Plotkin is a veteran Silicon Valley writer, editor and broadcaster. He also has a wireless phone line, just in case. hplotkin@sfgate.com